One of the pillars of the European Union’s ESG policy is the Corporate Sustainability Due Diligence Directive (CSDDD). This directive entered into force on 25 July 2024 and still needs to be transposed into national legislation. Its aim is to ensure that large companies prevent, mitigate, or bring to an end adverse impacts on human rights and the environment as much as possible, including when these occur within their value chain.
The CSDDD requires large undertakings to conduct ongoing due diligence on their own activities as well as those of their established (value chain) partners. Companies must provide insight into the impact of these activities in the areas of environmental, social and governance (ESG) matters. If these activities have adverse consequences for people or the environment, the company must take measures to prevent, mitigate, or bring an end to those consequences. Finally, companies are required to report on how they comply with their due diligence obligations.
Companies that act in breach of the CSDDD obligations risk enforcement measures and liability. In the Netherlands, the ACM will be designated as the supervisory authority responsible for monitoring compliance, and it will also be empowered to impose turnover-related fines for violations.
The CSDDD also includes a specific civil liability regime. In practice, this adds little that is new for the Netherlands: ESG-related claims, especially environmental damage, could already be brought before the civil courts. Dutch liability law is already based on open standards and duties of care. However, it is expected that Dutch due diligence standards will increasingly be influenced and shaped by international standards such as the CSDDD.
The CSDDD does not apply to all companies, but mainly to large undertakings. Depending on the number of employees and turnover, companies will have several years to comply with the obligations. The exact criteria are still subject to change.
The CSDDD has also been affected by the Omnibus Proposal. Initially, the directive had to be implemented by 26 July 2026. This deadline has now been postponed to 26 July 2028. Among other things, the proposal narrows the scope, meaning fewer companies will be subject to the obligations. The substance of the obligations is also being reduced: companies will only need to report on their direct chain partners, rather than the entire value chain.
The Omnibus Proposal is still only a proposal and not yet official legislation. The European Parliament rejected the legislative package on 22 October 2025. For now, the status of the CSDDD therefore remains uncertain.
The Dutch government has already drafted a preliminary legislative proposal, the Act on International Responsible Business Conduct (WIVO). It is expected that once simplified rules emerge from the EU, this proposal will be adjusted accordingly.
Do you have questions about ESG or sustainability? Please contact Sonja Geldermans, Corporate Law Attorney.
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